1. Technical Field
This invention relates to the general field of payment systems, and more particularly, to a self-contained payment system using digital vouchers for payments from individual to individual, individual to business, from business to individual and from business to business.
2. Description of the Prior Art
Today, there are a number of different payment systems in use allowing an individual or a business to make payment to another individual or business. The most common are paper bills and coins, debit and credit cards, checks, traveler checks and others. Newer forms, many still in field trial stage, are home banking, smart card based methods or on-line methods for the internet and intranets.
These payment systems are all sub optimal because they are limited in the scope of how and in what situations they can be used. Therefore, it is necessary today to use a range of payment systems in parallel:
Paper bills and coins are anonymous in use, can be used freely from individual to individual, individual to business, from business to individual and from business to business. However, they require a physical transfer, and micro payments of less than $0.01 are not possible, payments must be divisible by $0.01. If lost or stolen, paper bills and coins cannot be replaced.
Debit and credit cards protect the user against loss and fraud. However, the transactions are not anonymous and they can only be used to pay merchants who are registered with the appropriate debit or credit organization. In addition, small payments (less than $5) are generally not accepted.
Checks are practical to send a payment to another distant party. They also protect the user against loss. However, since they are a paper based system, they need to be physically transported to the recipient's bank which can be a multiple-step and time-consuming process. In addition, the funds are often not immediately available to the recipient, who might have to wait until the check cleared the bank. Check payments are not anonymous. Payments of less than $0.01 are not possible.
Home banking as a payment system replaces generally the physical check with an electronic check, shortening the time for the recipient to receive the funds. However, the other disadvantages with respect to checks remain. In addition, home banking requires a PC with a modem.
Smart card based systems. The smart card is used as a medium of storage for value. The cards act in conjunction with a reader to allow payment. Therefore, a physical contact needs to be established between the payer and the payee. There are a number of different underlying technological approaches:
One technology approach (such as the field trial by Mondex in the UK) is anonymous, modeled after the paper bill and coin system. Currency can freely and without restrictions be moved from individual to individual, individual to business from business to individual and from business to business. These systems so far do not work for internet transactions and payments of less than $0.01 are not possible, payments must be divisible by $0.01. If lost, the funds cannot be replaced.
Most other smart card approaches are mostly non-anonymous and are limited to a payment from an individual to a registered merchant, in addition the merchant can not use the funds immediately, the funds must first clear the banking system. (examples are the technologies behind field trials such as Visa Cash, MasterCard, Proton, EC-Card, American Express, Smart Cash). If lost they generally can not be replaced, the exception is the American Express system which is modeled after the traveler check business.
Internet systems (such as CyberCash, NetBill, First Virtual, DigiCash or Millicent) are all in an early development or field trial state. They plan to offer micro payment options (First Virtual and CyberCash about $1 as smallest transaction, others about 1 cent). However, all these systems are limited, they can only be used on the internet. There is no payment system which can work on the internet ("on-line") as well as "off-line". Furthermore, most approaches can only handle payments from an individual to a merchant, the exception being a planned system for Deutsche Bank in Germany by DigiCash which is expected to allow individual to individual payments. Questions of anonymity are mostly not resolved at this time. DigiCash, a Dutch company is offering an anonymous approach. Most US based systems in development (for example CyberCash, Millicent) are mostly not anonymous.
Therefore, from a user's point of view all payment systems in existence as well as in development have a range of shortcomings. An ideal payment system should fulfill the following criteria:
Same payment system can be used for on-line and off-line payments.
Payments can be made in an on-line environment such as the internet, private networks, telecommunication networks, etc., as well as in an off-line environment for face-to-face transactions. Funds can be freely transferred from on-line to off-line and back to on-line.
Payment system can be used universally: pay anyone and receive funds from anyone, person or business, anywhere in the world.
Payments can be made from an individual to a business, from a business to an individual, from business to business as well as from an individual to an individual. The payment system can also handle multiple currencies.
Payments are available without restrictions and delays once received.
Payments can be freely used as soon as they are received. Furthermore, the transportation of a payment in the case of a non-face to face transaction is nearly instantaneous regardless of the physical distance between the payer and payee
Micro payments of less than $0.01 are possible, which is of value for future on-line usage based payment structures.
Privacy is guaranteed, yet the overall payment system is protected against illegal attempts to corrupt the system.
The system in anonymous, the privacy of the individual is protected. However, the system can recognize certain illegal transactions and the transaction history can be made transparent allowing the tracking of these illegal transactions. It is a policy issue not a technical issue to set the rules of revealing an individual's identity and transaction history.
Transportation of payments across the network is secure utilizing the latest encryption technologies.
Funds can be replaced when lost.
Integrity of national and international banking systems is guaranteed.
Irregularities in the payment system are detected and can not enter the banking system and therefore have no impact on the money supply of a country.
Receipts for payments are provided.
Multi-purpose use.
Payment system can in addition be used to handle other payment type programs such as loyalty programs (for example frequent flier programs) or benefit transfer programs (for example food stamps).
None of the payment systems in use today fulfills all or most of these criteria.
The payment system according to the invention fulfills the above criteria and is therefore superior to all conventional payment systems.